As more insurers withdraw from the state, the insurer of last resort is bloated with policies.
Citizens Property Insurance is slated to reach 1.7 million home insurance policies in Florida by the end of the year.
This is over three times the number of policies it had in 2020 and far more than it was designed to cover.
The issue leading so many home insurance customers to have to turn to Citizens is that insurers have been leaving the state, going under, or issuing non-renewal notices to thousands of customers at a time.
Farmers Insurance and AAA recently announced that they would be restricting the number of policies they would be carrying, and that many customers would be receiving non-renewal notices the next time their coverage was up. Those affected are finding themselves turning to Citizens to ensure that they have any coverage at all.
This trend is leading policyholders, as well as agents and politicians to speak up about their worries regarding the rapidly growing policies covered by Citizens.
Before Farmers made its announcement, Citizens already had 1.3 million home insurance policies.
That represents 100,000 more policies than what it had in June 2022, and nearly double the policies it covered in June 2021. There will be about 100,000 Farmers customers who will soon be seeking coverage elsewhere, and so will many of AAA’s customers whose policies will not be renewed.
Many are now wondering if Citizens is able to take on this large number of policies.
“Citizens was designed and created actually as the state’s insurer of last resort. So what the market is, is healthy, our numbers go down,” said Michael Peltier from Citizens. “And when the market is facing challenges, like we’re seeing right now, our numbers go up. That’s why we were created.”
Citizens is expected to take on another 400,000 home insurance policies before the end of 2023. Last month’s report of 1.3 million policies makes it the largest end-of-month total the insurer of last resort has had in the last decade.
“But this growth is going to stretch that capacity. The other area where they’re going to be stretched is staffing and processing, the huge influx of policies that could be coming their way,” said Tom Cotton, a Citizens insurance expert.
FAQs about Citizens Property Insurance in Florida
Q. What is Citizens Property Insurance?
A. Citizens Property Insurance is a nonprofit company run by the Florida state government. It serves as an “insurer of last resort,” providing insurance to Florida homeowners who are unable to find private-market coverage.
Q. Is Citizens Property Insurance available in Florida?
A. Yes, Citizens Property Insurance provides property insurance protection in Florida to those who are, in good faith, entitled to obtain coverage through the private market but are unable to do so.
Q. What is happening with Citizens Insurance in Florida?
A. Citizens Property Insurance is considering a rate hike plan with average overall increases of 13.1% in 2023 and 14% in 2024 for all its personal lines of insurance. The decision is aimed at offsetting non-weather related water losses, high reinsurance costs, and a surge of litigation.
Q. Who owns Citizens Insurance in Florida?
A. Citizens Property Insurance Corporation was created in 2002 by the Florida state government to provide property insurance for homeowners who could not obtain insurance elsewhere. It operates as a government-owned, not-for-profit, insurer of last resort.
Q. What is the Citizens Property program in Florida?
A. The Citizens Property program in Florida offers home insurance to Floridians who’ve been denied coverage on the private market. With nearly 1.14 million policies as of December 2022, Citizens is the largest home insurer in Florida — with 50% more policies since January 2021.
Q. What are the future plans for Citizens Property Insurance?
A. Florida Governor Ron DeSantis recently hinted that Citizens Property Insurance Corp., the state-created insurer, could undergo significant changes in the future.